Greek banking sector in the economic crisis and M&amp;As as a solution

Michail Pazarskis,Alkiviadis Karagiorgos,George Drogalas,Efthalia Tabouratzi

doi:10.22495/cbv15i2art4

Abstract

This study examines the impact of thirteen mergers and acquisitions in the Greek banking sector which took place during the period of economic crisis: 2008-2014. More specifically, the sample of this study consists of all the mergers and acquisitions that led to the four remaining Greek banks (the acquirers of the above-mentioned transactions) which are: National Bank of Greece, Piraeus Bank, Eurobank and Alpha Bank. These specific banks were chosen due to the fact that after the M&As transactions we were able to compare their financial data. This comparison was made by using eight ratios for statistical tests one-year pre- and post-merger. The results of the study indicate statistically significant improvement in three capital structure and viability ratios, as well as a slight improvement on a liquidity ratio, while there is statistically insignificant change or no improvement on the profitability and efficiency ratios. In conclusion, there was some improvement in terms of capital adequacy and loan structure as far as the total capital employed of the merged institutions is concerned, but without improving the profitability of the banks during the economic crisis in Greece.

Highlights

The M&As transaction is considered as an investment transaction and is assessed in relation to the Net Present Value (NPV) of each acquiring company (Healy, Palepu, & Ruback, 1992), while the selected ratios are calculated for all the sample companies during the period of the year before or the year after the M&As transactions and the mean from the sum of each ratio for the (t - 1) years is compared to the respective mean from the sum of the (t + 1) years, respectively
During the economic crisis period in Greece, the strategic moves that began after 2010 concerning the Greek banking system and that continue up to this date have influenced in various ways the business performance of the Greek banking institutions
As a sample of companies that proceeded in merger and acquisition transactions, we have selected various Greek banks that gave effect to a merger or an acquisition transaction during the time period from 2008 to 2014

Summary

Introduction

The shifting of the banking market’s regulatory framework on one hand, and the smaller players’ – such as EFG Eurobank and Piraeus Bank – claim for a larger share of the domestic market, on the other, put significant pressure on the larger and more traditional banks, such as National Bank of Greece and Alpha Bank As a result, the latter ones were compelled to face and adjust to this new reality, by proceeding either with their own acquisitions, their technological upgrading or employee learning practices (Maditinos, Theriou, & Demetriades, 2009; Kyriazopoulos & Petropoulos, 2010; Liargovas & Repousis, 2011). The historical changes in the Greek banking system began in 2012 and continue during the economic crisis, resulting in multiple negative effects, especially in the business performance of Greek banking companies (Sompolos & Mavri, 2018)

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Conclusion